Aon Hewitt today announced the 19th edition of its Annual Salary Increase Survey in India. The study, the largest of its kind in India, analysed data from more than 580 companies. The results reflect a positive yet cautious sentiment in India Inc. towards salary increases.
Anandorup Ghose, Rewards Consulting Practice Leader at Aon Hewitt India, commented: “On the back of improving business confidence, a stable government and moderating inflation there is a significant improvement in business confidence across companies, however this confidences is not reflecting in salaries. The projected salary increase number shows a subtle improvement over salary increases in the last 3 years.
Companies across industries are continuing to take a cautious stance and are not going for aggressive pay increases.” Sectors such as Life Sciences, Engineering Services, Chemicals and Media are projecting a higher increase than the market average.
These industries have also consistently led the salary increase numbers since 2012. The overall positive sentiment in the economy has impacted the Real Estate & Infrastructure sector significantly. The sector has moved up many places to lead the salary increase pack this year. Services industries like Retail, Financial Institutions, and Hospitality represent the lower end of salary increase projections.
The survey highlighted that almost 70% of the respondents believe that there will be improvement in the business outlook. About half of all companies feel that positive business sentiment and increasing pay budgets in their competitive market are driving factors in their decision to increase salary projections from earlier years.
Top/Senior Management will see approximately a fourth of their total compensation being variable and even the bottom of the pyramid, at entry levels roles, more than 12% of compensation can be expected to be paid through performance-linked pay. There is a steady trend towards greater performance-based pay and it indicates a shift in overall pay philosophy across Indian companies.
Anandorup Ghose commented: “Even in good years India Inc is showing greater focus towards driving performance-based differentiation in pay budgets. This will enable companies to manage their compensation costs much better than they have been in the past. We are also seeing an increase in overall employee benefits costs for companies; there is a marginal but definite shift in the level of benefits being offered to employees”.
India Inc. attrition rates in 2014 continued to be broadly at par with 2013 at 18.1%, but key talent attrition has witnessed a 31% jump. Key talent attrition in 2014 registered at 5.9% as compared to 4.5% in 2013. Increasingly organisations are developing separate retention plans and policies for their top talent.
